THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

There is no historical financial information about us upon which to base an evaluation of our performance. We are a development stage corporation and have not generated or realized any revenues from our business operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of the property, and possible cost overruns due to the price and cost increases in services.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders. We may seek equity financing to provide capital for further exploration.

OVERVIEW

Until we changed our business plan in May 2008, we were exploring one property containing two claims relating to mineral rights in British Columbia, Canada. The claims were initially purchased in March 2004 by our former president, Robert Wayne Morgan, for $1,118. However, we suspended exploration pending a resolution of the Ministry of Environment's condemnation plan. No resolution was ever received, and the board of directors abandoned the claims in June 2008.

Commencing in May 2008 we hired new management and changed our business plan to become an independent developer of bulk liquid fuel and chemical storage facilities. On June 26, 2008, we purchased a seven percent (7%) interest in Safeland Storage, L.L.C. a Louisiana limited liability company ("Safeland"), represented by 70,000 Class A units for a purchase price of $1.5 million, pursuant to a Membership Interest Purchase Agreement with Safeland. Safeland is an unrelated party. Contemporaneously therewith, on June 26, 2008, we entered into a Purchase and Sale Agreement (the "Purchase and Sale Agreement") for the purchase of 435 acres of land in St. John the Baptist Parish, Louisiana, from Safeland, for a purchase price of $20,500,000.00. The closing of the Purchase and Sale Agreement is to take place within 120 days from June 26, 2008. We are exploring several options to raise money to close the acquisition, but as of the date of the filing of this Quarterly Report on form 10-Q we have not entered into any definitive agreements to raise any such funds.

Safeland has completed preliminary engineering and design and obtained state-regulated environmental permits for the facility. We intend to develop the facility in three phases with a resulting total of approximately 10 million barrels of capacity. Phase I is anticipated to be approximately 3.5 million barrels of storage with an expected completion date of the first quarter of 2010. Phase II is expected to add 3.4 million barrels coming on line in the first quarter of 2011, followed by phase III with 3.0 million barrels in the first quarter of 2012. Our proposed site is located in the heart of South Louisiana's petroleum refining and chemical manufacturing corridor that has a refining capacity of approximately 2 million barrels per day. This represents approximately ten percent of the total U.S. refining capacity, including existing world-scale crude oil refineries such as Marathon Garyville (adjacent to the Company's property), Valero St. Charles and Shell Norco (the first two of which are undergoing major capacity expansions). The site is located within 15 miles of the U.S. Strategic Petroleum Reserves at St. James and the LOOP (Louisiana Offshore Oil Production). It is strategically located for connectivity to the Colonial and Plantation pipelines via the Bengal pipeline. The Colonial and Plantation pipelines serve the U.S. as major refined product arteries from the Gulf Coast to the Eastern Seaboard of the U.S., providing approximately 42% of the East Coast refined product demand. The site offers complete intermodal logistics capabilities including deep water access on the

Mississippi River for ships and barges and access to major highways (U.S. Highway 61 to the north and the Mississippi River and East Jefferson highways to the south). Two railroads, Kansas City Southern and Canadian National, currently have infrastructure on the property, which is expected to enable the Company to attract rail-served storage positions.

In order to effectuate our business plan and build the facilities described above, we will need to raise up to approximately $500 Million. As of August 15, 2008, we have not entered into any definitive agreements to raise any portion of such amount, although we are exploring alternatives to do so.

Bulk liquid terminals store a range of products including crude oil, bunker fuel, gasoline, distillate, diesel, jet fuel, chemicals, agricultural products and biodiesel. For example, on the refined product segment of oil, in the United States, approximately 300 million barrels of refined products, blendstock and intermediate products are stored within the refined product value chain in facilities located between refinery processing units and product tank trucks (out of an estimated 700 million total barrels of storage including crude oil and other liquid products). Refiner storage accounts for about 40 percent of total product inventory while refined product pipelines typically containing less than 20 percent. The remainder, accounting for approximately 100 million barrels of inventory, is stored in bulk storage terminals that provide facilities for aggregation, distribution, finished produce blending, imports offloading and pipeline staging.

The importance of bulk terminal facilities in the refined product segment supply chain has grown significantly over the past decade as the nation's product supply patterns have become increasingly more complex. The number of operating refineries in the U.S. has declined in the period, resulting in fewer refinery sites that produce higher volumes of more grades of finished and unfinished products. Bulk storage facilities have expanded to accommodate the growth in output from the surviving refineries, the increase in the complexity of finished product blending, and the staging flexibility required by refined product pipelines. In addition, the change in supply patterns, including the increase of Brazilian crude and the decreases in the availability of Venezuelan crude, have driven the need for more storage and blending capacity. These services are essential in order to effect timely and efficient operation of the U.S.'s fuel distribution system.

Third-party terminalling businesses are generally independent operations that support many different commercial customers including refiners, blenders, traders and marketers. Income is derived from tank leasing, operational charges associated with blending services and throughput charges for receipt and delivery options. The primary strategic drivers of the business include location and connectivity to logistics infrastructure. Capital investment in terminalling assets is generally supported by long-term (five years or more) contracts with major oil and gas, chemical and agricultural companies.

Investments resulting in incremental expansion of existing capacity through tank additions and increased utilization of existing infrastructure such as docks, pipeline origin pumps, truck racks, etc. have been the focus of the industry over the past two decades. Over the past few years, the underlying infrastructure and in some cases the real estate associated with many bulk terminals has been exhausted. As such, industry fee structures have evolved with costs for additional capacity today increasing over historical levels to recoup the total cost for real estate, new tanks and the addition of related terminal infrastructure as well.

RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2008

THE FOLLOWING TABLE SETS FORTH, FOR THE PERIODS INDICATED, CERTAIN OPERATING INFORMATION EXPRESSED AS A PERCENTAGE OF REVENUE:

THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THREE MONTHS ENDED JUNE 30, 2007


                                         ---------------------------
                                         Three months ended June 30,
                                         --------------------------

                                           2008            2007
                                         ---------      ---------

CONSOLIDATED STATEMENT OF OPERATIONS
DATA:

Revenues                                 $       0      $       0
                                         ---------      ---------
Costs and Expenses:
   Costs of revenues                             0              0
   Research and development                      0              0

   Selling, general and
   administrative                          214,722          1,784
                                         ---------      ---------
     Total costs and expenses              214,722          1,784
                                         ---------      ---------
     Operating loss                       (214,722)        (1,784)
   Interest expense                              0              0
   Interest and dividend income                273            294
   Other income, net                             0
   Equity in loss of affiliates                  0
                                         ---------      ---------
Net Loss/Gain                            $(214,449)     $  (1,490)
                                         =========      =========

REVENUES. We had no revenues for the three months ended June 30, 2008 or the three months ended June 30, 2007. We had no operational activity during the first quarter of fiscal years 2007 or 2008. We currently expect to begin generating revenues in the 1st quarter of 2010.

OTHER INCOME. Other income was $273 in the three months ended June 30, 2008 compared to $294 in the three months ended June 30, 2007. Other income for both periods is from interest generated from bank accounts.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $214,722 in the three months ended June 30, 2008 compared to $1,784 in the three months ended June 30, 2007. This increase of over $212,000 was primarily attributable to Blackwater Midstream hiring members of its management team during May and June 2008 which accounts for approximately 56% of total SG&A Expenses. Other significant expenses during this period were professional fees of over $60,000, accounting for approximately 29% of total SG&A expenses and travel related expenses of over $10,000, accounting for about 5% of total SG&A expenses.

NET LOSS

Net loss was $214,449 in the three months ended June 30, 2008 compared to $1,490 in the three months ended June 30, 2007. This increase in the period's loss was attributable to start up expenses related to the new line of business and management terms.

LIQUIDITY AND CAPITAL RESOURCES

We issued 5,000,000 shares of common stock through a Section 4(2) offering in March 2004. This was accounted for as a purchase of shares of common stock.

We issued 3,011,500 shares of common stock through our public offering declared effective on February 11, 2005 and raised $150,575. This was accounted for as a purchase of shares of common stock.

Beginning on June 4, 2008, the Company entered into certain subscription agreements (collectively, the "Purchase Agreement") with certain investors (the "Investors") for the sale of an aggregate of 2,500,000 shares of its common stock, par value $.001 per share (the "Shares"), at a purchase price of $2.00 per share (the "Offering"). Each Purchase Agreement sets forth certain rights and obligations of the parties, as well as customary representations and warranties by the Company and the Investors. As of August 13, 2008, the Company had consummated transactions resulting in the aggregate sale of 2,092,500 Shares for gross proceeds of $4,185,000. In connection with the Offering, the Company engaged Falcon International Consulting Limited to act as placement agent. Falcon International received a fee of $418,500, or 10% of the gross proceeds of the Offering, in addition to 83,700 Shares.

As of June 30, 2008, our total assets were $1,935,830 and our total liabilities were $288,305. We had cash and cash equivalents of $345,986.

At June 30, 2008, we had working capital of $362,391 compared to a working capital of $23,055 June 30, 2007. Operating Expenses for the quarter ended June 30, 2008 were $214,722. Our operating expenses consisted primarily of management salaries, professional fees and other administrative expenses.

We are currently exploring options to raise additional capital, although as of the date of the filing of this Quarterly Report we have not entered into any definitive agreements for such capital. We can make no assurances that the Company will find additional financing on favorable terms, or at all.

We have no long-term debt.

OFF BALANCE-SHEET ARRANGEMENTS

None.